In forex trading, you buy or sell two currencies, the base currency and the counter currency. The most common pair is EUR/USD, where EUR is the base currency and USD is the counter currency. When you trade euro/USD, you are buying one currency and selling the other. The price quoted on the exchange is the amount of the euro, which is then translated into US dollars. When you make a purchase, you will pay a price that is equal to the price of the euro. If you’re selling a position, you’ll get your deposit back. When you sell your position, you will have to buy another one in exchange.
The first currency you buy is called the “base currency”. In this case, you’re purchasing one currency for one that you want to sell, and selling another for another. A currency pair always has two currencies; one is the quote currency and the other is the base currency. When you trade forex, you’re always buying and selling a currency at the same time. You can buy USD for 1.1916 EUR, while selling EUR for 0.9288 USD. By doing so, you’ll be trading in the market at the same time, and you’ll earn a profit, depending on your success in speculating the market and which currency will perform better.
Last Line
Most retail traders in the forex market trade with unregulated, semi-unregulated brokers. These companies may re-quote prices and trade against their customers. While there are several safeguards in place for investors around the world, the best way to protect yourself from the risk of losing your money is to use a reputable broker that is regulated in your country. This will ensure your account is protected in the event of a market crisis or insolvency.
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